Disclaimer: the predictions in this post are the opinions of the author and should not be taken as any sort of investment advice or recommendation nor as an indicator of any future policies or initiatives of Vancity Community Foundation. These predictions are provided for entertainment and discussion purposes only.
It has been an immensely exciting year for us here at Demonstrating Value what with the launch of our new website, the launch of the toolkit for Farmer’s Markets, and exciting dashboard development collaborations with our internal partners at Vancity Community Foundation. This week, as I enjoy a brief respite from the hustle and bustle of social entrepreneurs and all the manic energy that goes with them, the stillness of the winter solstice has inspired me to gaze into the darkness and make some predictions for the year ahead.
I have picked three major trending areas that I think will have the greatest influence over the world of social entrepreneurs in the coming year. If I didn’t enjoy taking some calculated risks, I’d be working in some other field, so to keep things exciting I also offer some specific predictions and only time will tell if my foresight is 20/20, or if I should replace my crystal ball.
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The Trend: Social Return On Investment solidifies its position as the standard for social impact evaluation among a suite of related products targeted at socially responsible businesses.
Acting on good intentions for social responsibility in a business context isn’t a solo game - it requires a few significant systemic pieces to be in place, like a validated methodology for evaluation (SROI), a shared set of indicators (IRIS), some reporting standards (GRI, GIIRS), and options for legal incorporation (B-Corps). Our minor prediction is that B-certification, IRIS, GRI, GIIRS, and SROI will collectively become known as the “BIGGS” platform - a standard accountability architecture for socially responsible organizations, not unlike the common “LAMP” (Linux, Apache, MySQL, PHP) architecture for web servers. This will lead to more wide-spread adoption by SMEs with a complementary spike in demand for consulting services.
My Specific Prediction: By June of 2013, at least one of the major management or accounting consultancies will do a high-profile media launch of a new service area specifically on social impact evaluation with SROI at its core. My bet is on Deloitte, KPMG, or Grant Thornton.
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The Trend: social enterprise management apps are becoming more focused, more integrated and moving into the cloud, making integration with social media easier.
Affordable hosted ERP solutions that are tailored for nonprofits and social enterprises (like netsuite.org and others) will enable new, agile nonprofits to implement internal systems “from a clean slate” for a relatively low cost, build a membership/donor base, conduct public campaigns, and engage volunteers and networks with a fraction of the effort of adapting the existing systems of mature nonprofits. Small orgs will leverage the possibility inherent in social media and networks and cloud-based solutions will allow easier scaling.
Like the pharmaceutical sector, where the established giants innovate by acquiring startups, big nonprofits and charities will compete through mergers. They will deepen their social media savvy and renew their IT systems by hiring and acquiring from smaller orgs who have put in the time to create a working system for their impact area. Visionary large nonprofits will strategically support collaborative social media and IT projects in their impact sector with an eye to absorbing the most promising talent and solutions that emerge. Large nonprofits may also become more sophisticated in their marketing by adopting a “house of brands” approach to reach several niches in a fragmented market for charitable donations while benefiting from the efficiency of shared IT, CRM and financial systems.
My Specific Predictions (two for the price of one): a large Vancouver nonprofit will launch a social enterprise featuring an innovative product or service by acquiring an existing small business (rather than launching from scratch); an upstart nonprofit in the health charity sector will effect a "reverse takeover" of a much larger established organization by simply being amazing at what they do and building momentum quickly.
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The Trend: Modest investment returns continue to cramp the traditional charitable foundation model of relying on investment revenue to fund granting and operations.
A traditional business model for a granting foundation is to fund as much as possible of grants and operations from investment income. Operating costs can be relatively inflexible, which puts some stress on the granting budget when market returns settle into a plateau at 3% or less.
Bring into the equation the beginning of a huge succession of assets and management positions from Baby Boomers to Millennials and I predict some changes in how philanthropy happens. Young people (born 1980 and later) will drive an explosion of “venture philanthropy” either directly or through charitable intermediaries as engaged donors. The quick success of platforms like Kiva has shown that many young people would rather see their entire donation in action as a zero-interest loan than only 3% of the donation granted annually. The children of retiring Boomers will lead a new movement in impact investing.
At the same time, Canada Revenue Agency has opened up the possibilities for what charities and foundations can do in terms of Community Economic Development and Program Related Investments (PRIs). Foundations that can publicly establish their expertise at creating compelling opportunities for PRIs will be lightning rods for Millenials looking to make a change in the world with their newfound assets (or their parents’). This will in turn lead to a glut of available credit and grants for social enterprises if they can muster the appetite to take a risk on rapid growth. The entrepreneurial activity around the nonprofit/social enterprise sector will intensify and hit the mainstream.
Specific prediction: By the end of 2013 at least 12 of BC’s 20 largest public foundations will either have a public youth engagement strategy around donor engagement/impact investment or have a board member under age 35.
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Check back in December 2013 and we'll see what really happened. Happy New Year to all our readers!
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